Argentine Grupo Galileo to expand virtual pipelines

Dec 21, 2004 01:00 AM

by Drew Benson

Although billed by promoters as a cleaner and cheaper fuel, natural gas doesn't reach much of rural Argentina, where low demand can't offset the costs of building expensive pipelines.
That leaves many isolated communities to rely on more costly propane and butane gas tanks as well as coal, charcoal and even wood to meet heating and cooking needs.

Developed by Argentine company Grupo Galileo, the system uses compressed natural gas, or CNG, which is delivered in portable pods to small communities where it is decompressed and fed into mini gas grids. Grupo Galileo set up its first virtual pipeline in September 2003 in central Argentina's Cordoba province to serve eight communities ranging in size from 1,000 to 6,000 people. Now, after successfully providing gas to some 20,000 people in southern Cordoba, the company plans to expand, according to president Fausto Maranca.
"We could reach some 100 communities... within a year and a half," Maranca told. "We have reached accords with the cooperatives. Now we are lining up the financing."

The initial Cordoba project was funded by a 10-year, 12 mm peso ($ 1 = ARS 2.965) loan from Argentina's state-run Banco de la Nacion.
According to Horacio Pinasco, a public utility consultant who helped set up the pilot program, the project virtually pays for itself. Compared with butane and propane tanks that cost homeowners 1.90 pesos per cm, Cordoba users now pay 1.10 pesos per cm for natural gas -- and the lower price includes a 70-centavo loan payment surcharge, he said.

Argentina is already a world leader in CNG-fuelled vehicles. Demand for natural gas products surged here after the government converted utility rates into devalued pesos and froze them in February 2002 amid an economic meltdown. As a result, natural gas became disproportionately cheap and many Argentines, themselves hurt by the financial crisis, turned to CNG to fuel their cars.
Today this South American nation is home to more than 1.2 mm private cars and public buses running on CNG, compared with roughly 600,000 in neighbouring Brazil -- and a mere 130,000 in the US as of May 2003.

As interest in natural gas has risen amid higher world oil prices, Grupo Galileo has sold its CNG systems and products to companies in the Philippines and Brazil, Maranca said. The privately held company has also provided expertise and advice to nations including India, where smog choked cities like New Delhi are rapidly converting to cleaner-burning CNG buses.
"Many countries have underestimated the use of natural gas, but with our system they can see that it can be done cheaper," Maranca said.

Grupo Galileo's virtual pipeline system uses gas compression stations that tap into existing natural gas pipelines. The compressed gas is then transported in "MAT" modules -- big yellow pods similar in shape to the old plastic foam Big Mac hamburger containers. About as tall as a grown man, the modules hold from 1,300 to 1,500 cm of compressed gas and are delivered to community substations on flatbed semis that carry up to four pods each.
The full pods can be exchanged by the truck drivers for empty ones in a matter of minutes, which makes the system more flexible than using normal tanker trucks. The delivery rate to a town is then determined by computers that use community usage data to set the virtual pipeline's "flow."

Source: Dow Jones
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